iRealtee OS Glossary

Maceda Law

The law establishes two categories of protection based on payment history:

Maceda Law

Maceda Law is a Philippine statute (Republic Act No. 6552) that protects buyers of real estate on installment payments against onerous and oppressive contract conditions. Enacted on September 14, 1972, it grants defaulting buyers rights to grace periods and refunds when they have paid at least two years of installments.

Key Provisions

The law establishes two categories of protection based on payment history:

For buyers with at least two years of installments paid:

  • Grace period: One month grace period for every year of installment payments made, exercisable once every five years
  • Right to pay without interest: Unpaid installments can be settled within the grace period without additional interest charges
  • Cash surrender value: If the contract is cancelled, sellers must refund 50% of total payments made, plus an additional 5% for every year beyond five years (capped at 90%)
  • Cancellation notice requirement: Actual cancellation occurs only after 30 days from buyer's receipt of notarial notice and full payment of cash surrender value

For buyers with less than two years of installments paid:

  • Minimum 60-day grace period from the date the installment became due
  • Seller may cancel after 30 days from buyer's receipt of notarial cancellation notice

Who is Affected?

  • Buyers of residential real estate on installment plans, including condominium units
  • Real estate developers and sellers offering installment payment schemes
  • Real estate brokers facilitating installment-based transactions

Exclusions:

  • Industrial lots
  • Commercial buildings
  • Sales to tenants under RA 3844 (as amended by RA 6389)

Penalties

The Maceda Law does not prescribe criminal penalties. Instead, it renders any contractual stipulation contrary to Sections 3, 4, 5, and 6 null and void. Buyers may seek judicial remedies if sellers fail to comply with:

  • Required grace periods
  • Notarial notice requirements
  • Cash surrender value refunds

Relevance to Philippine Real Estate

You need to understand the Maceda Law if you are buying property through installment or equity payments—the most common method for pre-selling condominiums and house and lot packages in the Philippines.

Practical applications:

  • Before signing: Ensure your Contract to Sell or Reservation Agreement does not contain clauses that violate Maceda Law protections
  • During payment difficulties: You can update your account within the grace period to reinstate your contract without forfeiting previous payments
  • Assignment of rights: The law allows you to sell or assign your rights to another buyer through a notarized deed before actual contract cancellation

For developers using platforms like iRealtee, the payment tracking and payment schedule features help ensure compliance with Maceda Law grace period computations and proper documentation of buyer payment histories.

References

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